Macro Digest: US Dollar stronger new view for balance of 2016

I remain a long term US Dollar bear as world can't function on stronger USD….but I see several warning signals which could catapult US Dollar higher into end of 2016 – and which from technical point of view would be 5^th wave of US Dollar strength.

 

This is a selection of charts which either concerns me or tells me something is changing.

 

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Main position would be to long US Dollar vs. NZD, AUD and ZAR

 

NZD .7200

AUD .7700

ZAR 13.50

 

Stops 1 ATR on close

 

The more risk seeking could sell Gold or Silver here for correction:  1352.00 and 20.00 again with 1 ATR stop

 

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Broad based US Index – above 100 SMA and breaking 200 SMA…… 122.68 Donchian buy level (vs. spot 121.74)

 

 

Channel support?

 

US Money market reform coming online on October 14, 2016 has effectively HIKED rates for Fed!  Note how 3 Month LIBOR trades above 2 yrs. US FI

 

 

 

2 YR also looks bid on its own…

 

 

Finally,

 

Basis swaps into US Dollar – both JPY and EUR – indicates market paying big PREMIUM to get US funding..

 

 

 

I'm changing my short-term view to LONG US$ - while maintaining long term US Dollar will weaken – I see this finally move as the 5^th wave strength – as suggested by John Hardy in an internal response to me…….

 

Timing of course being everything here, but with assets now priced to beyond perfection it makes sense to see correction in high yield bonds, bonds and US dollar….

 

 

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